IRELAND REACHING END OF DECLINE - CITI ECONOMIST - There has been talk this New Year of a gradual global economic recovery. Then this weekend, figures from China blew expectations away, when its exports were reported to have grown by 17.7% in December from a year earlier, breaking 13 months of declines. And China's imports surged 55.9%. At home last week we had better than expected Exchequer figures, and confirmation that the euro zone's economy grew by 0.4% in the third quarter of this year, as it emerged from recession.
Willem Buiter, Citi's chief economist, says that China remains the 'locomotive' of the global economic recovery. He says that the import figures were especially spectacular, although he points out they are still lower than before China went into its short-lived recession. He says that while the country's rebound is spectacular, it comes from a very low base.
The economist says that in terms of GDP, Ireland is pretty much at the end of its period of decline. He says the country endured 'a bad 2008' and 'a very forgettable 2009', but there should be an evening out and a resumption of growth somewhere around the second quarter of the year. But he says how fast this resumption of growth will be depends on the global environment. He points out that most of the country's trade is not with China, but with some of the other slower growing advanced industrial countries. He says it won't be easy and that unemployment here will continue to rise for some time until growth reaches 2% or 3%.
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MORNING BRIEFS - In December, for the 31st month in a row, there was a fall in construction activity, and the sector showed its steepest decline seven months. According to the Ulster Bank Construction Purchasing Managers' Index, new business and employment also fell at faster rates during the month. For the second month in a row firms forecast that activity would be lower in twelve months' time than current levels. It says evidence suggests that new work was insufficient to compensate for the completion of existing projects.
*** A survey by consultants Mercer says financial organisations have changed their pay policies, moving away from short-term bonus schemes. Mercer says these companies now favour higher salaries, deferred compensation schemes and modified incentive programmes. Some of the blame for the financial crisis was attributed to a focus on bonuses for short-term performance in the financial sector. The information comes from 61 firms in the banking and insurance sector, one-third of whom have received government aid in some form, the majority had limits imposed on their executive pay programmes as a result.
*** Another survey - this time on mergers and acquisitions - show a significant drop in M&A activity in 2009, back to levels previously seen in the early to mid 1990s. Mazars says last year was extremely difficult, reflected by the significant fall in the number of transactions, but that there are signs confidence is beginning to reappear.
*** Law firm McCann Fitzgerald says the number of transactions notified to the Competition Authority in 2009 was the lowest number on record. McCann's review showed a 70% reduction from a peak in 2006.
*** European shares rose to a 15-month closing high on Friday. Overnight oil hit a 15-month high, as freezing temperatures in Europe and North America boosted fuel demand. Asian stocks are at a 17-month high with Hong Kong's Hang Seng up 1.3%. Tokyo's Nikkei is closed today.
*** On the currency markets the euro is trading at $1.451 cents and 90.2 pence sterling.
